May 29, 2009

Federal Government To Invest $30b In GM

In an effort to get bondholders to agree to terms, the Federal Government is willing to invest a further $30b in GM, on top of the nearly $20b it's already funded.

So far it seems the Government is going to own 72.5% of GM, the United Auto Workers (UAW) union's trust fund will own 17.5% (with a possible 2.5% increase in its stake later), and the bondholders (who hold $27b in GM debt) are expected to receive the remaining 10%, with warrants to buy an additional 15% share at a later date.

Current stockholders would essentially see their investments rendered worthless as GM is nationalized. They would also likely get nothing should the company file for bankruptcy protection.